Death. No-one likes to think about it, but it happens to us all. When you die, your loved ones will hold a funeral for you. This funeral is likely to cost thousands of dollars.
Who will pay for this funeral? In many cases, the money comes from the deceased’s estate. However, not everyone leaves behind enough wealth to pay for their funeral. In these cases, your loved ones will end up paying for your funeral.
Setting aside savings to put towards your funeral could be one way of making sure that your loved ones aren’t burdened with this cost. Of course, savings aren’t the only option – there are other ways to fund your own funeral which could also be worth comparing. This guide can help to determine whether you should save for your funeral not.
The pros of saving money for your funeral
Setting aside savings gives your loved ones some money to pay for your funeral so that they don’t have to reach into their own pockets. You get to choose exactly how much you want to save up in total and how much you will contribute each month.
You can use a high interest savings account to earn money on your savings contributions. This could allow you to get to your savings goal more quickly.
Saving could be put to other costs beyond your funeral such as probate and death certificates. You can also save up money for your loved ones to inherit and secure their future.
The cons of saving money for your funeral
Saving up thousands of dollars can take a while. If you’re only paying small contributions and you’re not young, you may not save up enough before you die.
Saving up money also takes a lot of discipline – if you’re not good at saving, you may find yourself tempted to not pay into your savings every month or you may find yourself dipping into it.
Some banks and building societies also may freeze your account when you die and not allow loved ones to access it until probate is granted (which can take months). You need to make sure that you choose an account that your loved ones can immediately access such as a joint account.
Alternatives to savings
Setting aside savings isn’t the only way to prevent your loved ones from having to pay for your funeral. There are a few other options, which include:
Life insurance provides compensation to your loved ones when you die. You pay a monthly rate and the insurer is then obliged to pay out compensation if you die before your term is over.
You can apply for life insurance at any age – as this post from Shawn Meaike explains, your rates are typically cheaper if you are younger. Life insurance policies all differ when it comes to the amount they pay out and how they pay that amount – some will pay out the full amount if you die tomorrow, while others may require you to be insured for several years.
Another option could be to pay for your funeral in advance directly to a funeral company. It’s a chance to not just pay for your own funeral but also plan it. Unlike a savings account, you can also be sure that the money will be put towards your funeral. Just bear in mind that you won’t gain interest on your contributions and usually won’t be able to access the money once it’s been paid.